The Shipowner’s Club, the UK-based protection and indemnity insurance club, is for the first time offering a pre-delivery liability insurance policy that aims to address a number of the insurance risks unique to the pre-delivery period of a custom superyacht new build project.
“We put this policy together because we kept getting requests from brokers to cover ever increasing lengths of time prior to a vessel coming into effect,” starts Ian Ferns, the Shipowner’s Club business research and development manager. “As P&I insurers we were increasingly being asked to cover risks where there isn’t actually a vessel.”
Typically, P&I coverage includes a carrier’s third-party risks for damages incurred during the ownership and operation of a vessel. However, during a new build project a grey area arises in which land-based insurers are unwilling to cover the project as a result of its maritime nature. Conversely, maritime insurers are equally unwilling to cover the project, because, during the pre-delivery phase, it is not a maritime issue.
The policy provides the necessary cover for incidents arising from crew, who at pre-delivery stage, are more akin to conventional shore-based employees and also the range of professionals who will be employed, under the owner’s auspices, for the duration of the build.
“In our new policy we cover the contractual liabilities at the point that the contract is signed, when there is no vessel and a lot of liability,” continues Ferns. “We are prepared to pick up all the contractual liability that owner has had to sign up to, in which he is indemnifying other people, as well as the slip and fall risk.”
It is not uncommon for individuals, working for the owner on a new build project, to demand indemnity for their service. In other words, they do not wish to be held responsible for damaging anything or anyone else during the pre-delivery process. The owner of the vessel is expected to provide a certain degree of protection to these individuals.
The scope of these indemnities tends to cover that which falls beyond professional liability. Such indemnities are usually only provided to individuals that the owner considers fundamental to the project.
“We look at it as covering all the owner’s liability for those he/she has agreed to be responsible for in an ‘owner’s group,’” continues Ferns. “The bottom line is, if we see the contract and we are happy with the liabilities, we will agree to cover those liabilities that the owner has agreed to take on under contract.”